Four Steps to Building Better Businesspeople
BY Jim Bado
If dividend checks, 20% increases in stock value, and record sales numbers are exciting business victories that put more money in your wallet, how did they become boring, ho-hum events that most employees could give two shakes about?
If you work for a company that shares performance information, you know that it's all in the delivery. Communicating financial statements full of bean counter mumbo jumbo severs most people's links to the business's action and excitement. As we listen to an endless list of assets and accruals, earnings and expenses - with financial ratios making guest appearances - we never connect the abstract numbers to our day-to-day actions. Even worse, people get all hung up on financial terminology, rather than how they can affect the business. They often leave feeling powerless to influence performance.
We all have the power to improve performance, but we need to understand how. Here are four ways that leaders, internal trainers, and nonmanagers - during breaks or in more formal settings - can translate the financial story to help employee owners think and act like businesspeople.
1. Connect the numbers to real-life experiences.
Every day, outside work, people wrestle with complex personal decisions, like budgeting household resources, planning for their children's education, and directing their own retirement savings. Even if all they do is occasionally balance their checkbook or pay off the credit cards, they are using business concepts.
You can transfer employee owners' fundamental financial knowledge to the business by starting with a personal-life example, then linking it to business finance. For instance, ask people where they get the money to run their household and what they spend it on. Focus on the concepts, not the terminology. By relating the personal example to your company's revenues and expenses, you begin drawing the connections between employees' experiences and business operations.
2. Get creative; make it fun, interactive, and engaging.
Since when is there an IRS regulation that financial presentations have to be boring, line-by-line explanations? They don't, so don't do it! Use your creativity. Sing a rap song about the Notorious P.R.O.F.I.T., or stage soap-opera-like skits such as As the Inventory Turns or Days of Our Receivables. Silly, sure; effective, you bet.
During meetings, break people into teams to guess last month's numbers, how close you are to plan, or whether sales and costs are up or down, and why. Make it like a game show, complete with prizes. After they guess, show the actual numbers and discuss the reasons their guesses were on or off the mark. Have a bias toward action by asking what can be done to improve next month's numbers.
3. Build a line of sight from daily work to the big numbers.
If you work in shipping, cost of goods sold (COGS) is too big to be a very meaningful number. Successful ship rate, however, isn't. By drawing a line of sight from it to COGS, you're conquering number phobia. Use multipliers to emphasize the point: if you send two orders a day by Federal Express, that may only cost a few bucks (no big deal, since we spend millions anyway, right?). But what if you, or everyone, did that every day for a year? Now we're talking real money - spending that employees control every day.
4. Play mini-games with visual scoreboards.
Start a friendly competition with your coworkers to improve performance measures that you affect on a daily basis. Use bold, colorful visuals to track how you're doing. If the company's performance goal is to increase sales by 10%, monitor the things you do every day to help reach that target (examples: number of phone calls made, visits with clients, proposals completed, orders booked). Reaching those mini-goals will lead to the overall sales increase. Keep the current score visible, like a sports ticker.
To conquer number phobia, you're going to have to take some risks - constantly reinventing your explanations to keep things interesting. Maybe the banker won't appreciate cash flow as a giant thermometer or bucket on the wall, or a sales target as the finish line of a drag race, but he will recognize the performance improvements that stem from employees thinking and acting like businesspeople.
This article was written by Jim Bado of Ownership Development Inc., an NCEO member.
Copyright 1999 The National Center for Employee Ownership. All rights reserved.